FIREcalc is not my favorite. It tells you what happened not what will happen, but it does give you some information. There is a portfolio disbursement method called the Bernicke’s Reality Retirement Plan based on a scheme by Ty Bernicke built into FIREcalc. The scheme is to start with a high payout and gradually reduce the payout by 2% or 3% per year to a constant payout in the future.
This is a payout scenario. The retiree is 50. The retirement amount is 3M and SS kicks in at 65. He takes 160K for 5 years (55) then decreases the take so at 76 he is making about 75K per year till he dies. Here is the scatter chart
It get’s pretty close to zero but never flames out for a 100% success looking in the rear view mirror. BUT who wants a >50% paycut when they are 76? You party like it’s 1999 and then ??? eat beans? You get cancer at 77??? Your old lady starts alzin???
Here is 1M @ 6% over 20 years
It grows to 3.2M in a relatively safe 50/50 2 stock account if you don’t tap it. Let’s tap it! At 65 Bernicke is paying maybe 115K and living is getting kind of tight. You;ve seen an income drop of 30%. So 15 years into retirement we’ll tap the million for an extra 40K per year for another 15 years taking you out to age 80.
The million pays you 600K and you still have 1.4M in the bank at age 80. Your take has tailed off from 160K/yr to 75K + 40K or 115K/yr and you’re now 30 years into retirement. You had a blast when you were ER and later after cruising the world for a decade travel has lost it’s luster and you don’t drive much so your car replacement need is diminished etc etc. If you get cancer the $1.4m can pay you the average 92K per year excess medical needs for 30 years and still not run out of money or you and mama can split 30 years of care. This is 1.4M @6% for 30 years at 92K/yr disbursement.
While you’re living large off the Bernicke acct 1M is accumulating and basically gives you a second retirement income when Bernicke starts to pinch.
FIREcalc does not give absolutes on the future and this article does not look at tax consequence or SORR. Instead it looks at a time shifted kind of diversity with different distribution schedules and different compounding and different SORR for each portfolio Bernicke and 1M. For my example you need 4M total at age 50, fat fire for sure, but maybe only 20 years into a typical medical practice it might be doable without need for side gigs post retirement. You can FIREcalc the 1M portfolio separately and get a different worse probably more likely result. but still surviving 85% of the time over 15 years. Like said this is play but intriguing. It was too confusing to try and present those scenario’s
Here is a spread sheet of retirement spending. At 57 spending starts to ramp down until age 66 where the Bernicke retirement has lost 20% (headed to 39% loss) at a $127K payout. At 67 portfolio 2 has grown to an estimated 1.5M (range .9M to 6M) and starts to throw off $40K/yr constant. The tail off starts again but this time winds it’s way down to $138K where it normalizes. Over the 50 year course Port 1 pays out 5.9M and Port 2 pays out 1.3M on a $4M investment. This isn’t a detailed analysis accounting for taxes and SORR etc but a quick FV calculation says Port 2 will have several M at age 99 and FIREcalc says a 1M to 9M range in port 2 at age 99. My numbers differ from FIREcalc’s numbers because FIREcalc does look at historical SORR. These are my calculated numbers not from FIREcalc.
| age | port1 | port2 | spending/yr |
| 50 | $160,000 | $0 | 160,000 |
| 51 | $160,000 | $0 | 160,000 |
| 52 | $160,000 | $0 | 160,000 |
| 53 | $160,000 | $0 | 160,000 |
| 54 | $160,000 | $0 | 160,000 |
| 55 | $160,000 | $0 | 160,000 |
| 56 | $160,000 | $0 | 160,000 |
| 57 | $160,000 | $0 | 160,000 |
| 58 | $156,000 | $0 | 156,000 |
| 59 | $152,100 | $0 | 152,100 |
| 60 | $148,298 | $0 | 148,298 |
| 61 | $144,590 | $0 | 144,590 |
| 62 | $140,975 | $0 | 140,975 |
| 63 | $137,451 | $0 | 137,451 |
| 64 | $134,015 | $0 | 134,015 |
| 65 | $130,664 | $0 | 130,664 |
| 66 | $127,398 | $0 | 127,398 |
| 67 | $124,213 | $40,000 | $164,213 |
| 68 | $121,107 | $40,000 | $161,107 |
| 69 | $118,080 | $40,000 | $158,080 |
| 70 | $115,128 | $40,000 | $155,128 |
| 71 | $112,250 | $40,000 | $152,250 |
| 72 | $109,443 | $40,000 | $149,443 |
| 73 | $106,707 | $40,000 | $146,707 |
| 74 | $104,040 | $40,000 | $144,040 |
| 75 | $101,439 | $40,000 | $141,439 |
| 76 | $98,903 | $40,000 | $138,903 |
| 77 | $98,000 | $40,000 | $138,000 |
| 78 | $98,000 | $40,000 | $138,000 |
| 79 | $98,000 | $40,000 | $138,000 |
| 80 | $98,000 | $40,000 | $138,000 |
| 81 | $98,000 | $40,000 | $138,000 |
| 82 | $98,000 | $40,000 | $138,000 |
| 83 | $98,000 | $40,000 | $138,000 |
| 84 | $98,000 | $40,000 | $138,000 |
| 85 | $98,000 | $40,000 | $138,000 |
| 86 | $98,000 | $40,000 | $138,000 |
| 87 | $98,000 | $40,000 | $138,000 |
| 88 | $98,000 | $40,000 | $138,000 |
| 89 | $98,000 | $40,000 | $138,000 |
| 90 | $98,000 | $40,000 | $138,000 |
| 91 | $98,000 | $40,000 | $138,000 |
| 92 | $98,000 | $40,000 | $138,000 |
| 93 | $98,000 | $40,000 | $138,000 |
| 94 | $98,000 | $40,000 | $138,000 |
| 95 | $98,000 | $40,000 | $138,000 |
| 96 | $98,000 | $40,000 | $138,000 |
| 97 | $98,000 | $40,000 | $138,000 |
| 98 | $98,000 | $40,000 | $138,000 |
| 99 | $98,000 | $40,000 | $138,000 |
| tot | $5,916,799 | $1,320,000 | $7,236,799 |
| acct | port 1 | port 2 | net |